Lago Agrio: DeLeon Surrenders; Chevron Claims Another Scalp

Marcus Junius Brutus
Et tu, Calmbacher Reyes the Huaorani people Burford Capital Stratus Consulting Beltman Maest Bogart Patton Boggs DeLeon?
Chevron has settled its claims against James Russell DeLeon and his firm, Torvia Ltd., which funded the Lago Agrio plaintiffs’ litigation. Roger Parloff published a copy of the Settlement Agreement in a Fortune article.

The price of the settlement was not money, but rather DeLeon’s repudiation of the Lago Agrio litigation and Steven Donziger, his agreement to provide document discovery to Chevron, and his agreement to pay any proceeds of the Lago Agrio litigation to Chevron. In return, Chevron is dismissing its claims against DeLeon, Torvia, and Julian Ross Jarvis.

The settlement does not entirely dispose of the Gibraltar litigation. Chevron still has claims against another third-party funder, Woodsford Litigation Funding Ltd., and against Amazonia Recovery, Ltd., the entity that was to receive the proceeds of the Lago Agrio litigation and in which Torvia had an interest, as well as against Pablo Fajardo and others, who were directors of Amazonia.

Former LAP spokeswoman Karen Hinton tried to put a good spin on things:

In a statement, Karen Hinton, a spokesperson for Donziger, said that DeLeon had provided no funds for two years, and that Donziger’s team welcomed the settlement, “because it will allow a significant stake in the winning judgment of the affected villagers to be used for clean-up of their ancestral lands rather than be paid to an outside investor.”

Hmm… I wonder if this is right. DeLeon and Torvia haven’t given up their interest in Amazonia Recovery. They simply agreed to pay over the proceeds to Chevron. So I’m not sure why the LAPs would think that the portion of the judgment that would have gone to DeLeon and Torvia will now be divied up among the LAPs and other stakeholders. Amazonia will get its share, and then, under its governing agreements, it will (it seems to me at first glance) have to distribute that share to its beneficial owners, including DeLeon and Torvia. Perhaps I am missing something here.

This settlement may rankle a little more than some of the others, because Donziger and DeLeon were law school clasmates. Who is left as a potential turncoat? Probably Woodsford Funding will be the next shoe to drop. Aside from the true inner circle and Woodsford, I can’t at the moment think of any third parties left standing. I have no doubt that the appellate lawyers for Donziger and the LAPs, and the LAPs’ lawyers in Canada and elsewhere who are seeking to enforce the Ecuadoran judgment, weighed the risk of the wrath of Chevron before taking the case, but it seems to me unlikely that Chevron would try to go after them. On the other hand, given Chevron’s theory of the RICO enterprise and its purpose, you might ask why the appellate lawyers should not be liable—which suggests, to me anyway, the possible overreach of the RICO theory.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

2 thoughts on “Lago Agrio: DeLeon Surrenders; Chevron Claims Another Scalp

  1. I think your analysis of the flaw in Hinton’s statement is correct, Ted. The underlying Amazonia documents seem to be sealed for now. But even assuming for the sake of argument that they contain some kind of provision extinguishing interests in the judgment that are transferred, the settlement does not require that DeLeon’s interests immediately be transferred. It only requires that proceeds be transferred, and even then only upon request by Chevron, and there’s no evidence that Chevron has yet so requested.

    1. Right. I don’t want to comment really firmly on this without seeing the document, but it seems to me that in general, a prohibition on transfers or assignment of a share of stock does not prohibit a shareholder from making a contract to assign the dividends. But again, I’d like to see the document. Also, I want to hedge my bets because the governing law may be Gibraltar law or the law of England and Wales or something.

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